Food trumps fashion as second Bourke Street freehold goes to market

A second Bourke Street freehold has hit the market on the hill west of Elizabeth Street. The OPSM flagship store at 384-386 Bourke Street is for sale again – the second time in four years.

But the shop won’t be selling spectacles or checking eyesight for much longer. The 1164 square metre double-storey shop is offered with a new 10-year lease in place to a restaurant, paying $586,275 a year.

Investor M & M Assets (controlled by Bak Hoe Goh and Bee Hoon and Yok Yeong Loh) paid $15 million for the shop in 2015 – a deal that reflected a 3.07 per cent yield.

Last week, the estate of art dealer Julian Sterling placed two buildings at 418-424 Bourke Street on the market and nearby 60 Hardware Lane sold at $25,432 a sq m on a 2.9 per cent yield.

The move comes as CBD retailing undergoes a massive shift from fashion to food and services. Around the corner at 108 Elizabeth Street, Travel Money has leased the former Jo Mercer shop at a rental believed to be around $420,000 a year.

And up near RMIT University and the State Library, men’s fashion retailer Jack London has been replaced by a fourth David’s Hot Pot outlet which will pay $410,000 a year.

Those leases were negotiated by CBRE’s Zelman Ainsworth and Tan Thach with managing agent Allard and Shelton on the Elizabeth Street deal and Adam Guest of Wilsons Agents on the Swanston Street property.

Other similar deals include Singaporean brand Milksha Tea replacing Spendless Shoes at 134 Elizabeth Street and Haigh’s Chocolate moving into the former Payless Shoes store at No. 138.

Monash advantage

Boutique fund manager Vantage is selling one of its longest-held investments, a suburban office building in the Monash Technology Precinct.

The precursor to Vantage, Spring & Parks – one of Melbourne's original syndicators – bought the property back in 2003 for $8.15 million. The outer eastern suburban office market was on the rise in the years before the global financial crisis crunched values.

541 Blackburn Road, Mount Waverley.

The fully leased four-level building at 541 Blackburn Road, Mount Waverley, is expected to fetch more than $20 million.

The building is anchored by NAB and returns $1.3 million a year in rent. The 3600 sq m building is on a large 6210 sq m site but occupies only 20 per cent of the landholding.

Vantage director Hamish de Crespigny said the long-term value of the property was probably as a development play.

"It's not being sold as a development site but there is the capacity to do it at the rear or redevelop the whole. However, our investors in this property are income-driven and aren't interested in taking on that risk," Mr de Crespigny said.

Suburban office is hot property again. Last month a Hong Kong investor paid $30 million for Salta’s new Dulux headquarters and Ascendas REIT has just splashed out $110 million for Frasers’ not-yet-completed 17,398 sq m Nissan Motor’s headquarters.

Closer to the city, the Zagame family paid $55 million for 2 Luton Lane in Hawthorn, a building recently leased to Swinburne University.

Lagoon on Lygon

Another step in the recovery of Lygon Street's retail woes has been taken, with the old Lygon Food Store shop at No.263 leased to a new restaurant venture steered by former Longrain and Ezard personnel.

The strip was already floundering when the Commonwealth Bank next door at No.259 – and its bank of cash machines – shut about 18 months ago.

The 70-year-old deli closed soon after and Lygon Street’s vacancy rate doubled to 13.5 per cent from 5.6 per cent, according to Fitzroys’ research.

Chris Lerch, venue manager of Longsong, the bar above Longrain and the former manager of Flinders Street fine-dining spot Ezard, along with chef Keat Lee and Lonsong former head chef Ned Trumble, have already started work on a new modern Asian restaurant in the space.

They have signed a five-year lease on the 95 sq m space paying $83,000 a year. The 80-seat restaurant will be called Lagoon Dining.

Fitzroys’ agent Chris James, who negotiated the lease, said the grand Victorian bank branch next door is also under offer.

The Little Italy era of Lygon Street is not totally over – D.O.C Espresso is across the street and around the corner and the Valmorbida family has relaunched the old King + Godfree building on the Faraday Street corner. Other recent entrants include Heart Attack and Vine, vegetarian gastro-pub the Green Man’s Arms and wine bar Lord Lygon.

Acland auction

A member of the De Lutis clan has called time on his St Kilda investment, the Sportsgirl store at 183 Acland Street, St Kilda.

Title deeds show CMD Property Group – controlled by Claudio Mark De Lutis – paid $3.88 million for the property in 2007.

183 Acland Street, St Kilda.

Colliers International Daniel Wolman, Ted Dwyer, Ben Baines and George Davies are handling the November 22 auction, which is billed as an “on-site realisation sale”.

The shop last went to auction in 2016 carrying a $7 million price tag but it passed in – seriously missing the market peak – and it’s now expected to fetch around $4.5 million.

Sportsgirl pays $262,250 for the 226 sq m shop. Mr De Lutis' older brothers Colin and Paul De Lutis had a very public legal bust-up over the family-run De Group in 2017. Paul De Lutis resigned as a director of De Group in February 2018.

Blooming sale

Developer Nicole Chow has sold another shop at the foot of her Flemington Road project, North, offloading the florist’s shop a couple of weeks before its scheduled auction.

Savills agents Clinton Baxter, Tim Carr and Yvonne Zhou sold the property for $1.6 million on a yield of 4.2 per cent.

Ms Chow has sold all the shops at the North Melbourne development for just under $15 million.

Elsewhere in North Melbourne, the River Nile School has paid $2.05 million for 13-15 Cobden Street. The school, which offers full-time programs teaching the VCAL curriculum to school-aged refugees, will use it for classroom space.

CBRE agent Dylan Kilner, who sold the property with Alex Brierley and David Minty, said the land rate of $21,800 represented a record price for the suburb.